Repic Ltd, R (on the application of) v The Scottish Environment Protection Agency & Anor

Regulation 70(1) of the Waste Electrical and Electronic Equipment Regulations 2006 (hereinafter referred to as “the Regulations”) imposes a duty upon the First Defendant to enforce the Regulations. By virtue of the same regulation he may appoint any person to act on his behalf in enforcing the regulations. Regulation 70(2) imposes a duty upon the Second Defendant to enforce the regulations specified in that regulation in England and Wales. The First Interested Party is the enforcement authority in respect of the same regulations in Scotland. In these proceedings the Claimant seeks relief against the Defendants consequent upon their alleged failure to take enforcement action under the Regulations against the Third Interested Party and the failure of the First Defendant to take enforcement proceedings against the Second Interested Party. In summary, the Claimant alleges that the Second and Third Interested Parties are in breach of an obligation imposed upon them by paragraph 4 of Part 4 of Schedule 7 of the Regulations and the Defendants have failed, unlawfully, to take enforcement action in respect of the breach.

The claim, as formulated by the Claimant, requires this court to consider the proper interpretation of paragraph 4 of Part 4 of Schedule 7. The court is also required to consider whether the Regulations transposed into UK Law Directive 2002/96/EC of the European Parliament (hereinafter referred to as the “WEEE Directive”) or whether the Regulations are in breach of the WEEE Directive. The acronym WEEE stands for waste electrical and electronic equipment.

The Claimant seeks declaratory relief. The precise form of the relief sought has not been formulated at this stage. Further submissions on the form of relief, if any, to be granted will be made after the parties have considered this judgment.

No relief is sought against the First Interested Party. Indeed, as I understand it I am not asked to offer a view upon whether it has failed, unlawfully, to take enforcement action against the Second Defendant which is a company subject to its enforcement jurisdiction. However, the First and Second Interested Parties have a clear interest in the outcome of these proceedings. I should record that the Claimant has taken equivalent proceedings to these against the First Interested Party in Scotland. Those proceedings are currently stayed. My conclusions – particularly as to the interpretation of the relevant part of the Regulations and whether they have achieved the effect of lawfully transposing the WEEE Directive into domestic law – may have a bearing on the Scottish proceedings.

The WEEE Directive came into force on 27 January 2003. Its purpose is expressed clearly in Article 1 which reads:-

“The purpose of this Directive is, as a first priority, the prevention of waste electrical and electronic equipment (WEEE), and in addition, the re-use, recycling and other forms of recovery of such wastes so as to reduce the disposal of waste. It also seeks to improve the environmental performance of all operators involved in the life cycle of electrical and electronic equipment, e.g. producers, distributors and consumers and in particular those operators directly involved in the treatment of waste electrical and electronic equipment.”

Article 1 is preceded in the WEEE Directive by a long preamble. It seems to me that the following paragraphs of the preamble are worth specific mention:-

“(1)

The objectives of the Community’s Environment Policy are, in particular, to preserve, protect and improve the quality of the environment, protect human health and utilise natural resources prudently and rationally. That policy is based on the precautionary principle and principles that preventative action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.

The amount of WEEE generated in the Community is growing rapidly. The content of hazardous components in electrical and electronic equipment (EEE) is a major concern during the waste management phase and recycling of WEEE is not undertaken to a sufficient extent.

The objective of improving the management of WEEE cannot be achieved effectively by Member States acting individually. In particular, different national applications of the producer responsibility principle may lead to substantial disparities in the financial burden of economic operators. Having different national policies on the management of WEEE hampers the effectiveness of recycling policy. For that reason the essential criteria should be laid down at Community level.

The establishment, by this Directive, of producer responsibility is one of the means of encouraging the design and production of electrical and electronic equipment which take into full account and facilitate their repair, possible upgrading, reuse, disassembly and recycling.

Users of electrical and electronic equipment from private households should have the possibility of returning WEEE at least free of charge. Producers should therefore finance collection from collection facilities, and the treatment, recovery and disposal of WEEE. In order to give maximum effect to the concept of producer responsibility, each producer should be responsible for financing the management of the waste from its own product. The producer should be able to choose to fulfil this obligation either individually or by joining a collective scheme. Each producer should, when placing a product on the market, provide a financial guarantee to prevent costs for the management of WEEE from orphan products from falling on society or the remaining producers. The responsibility for the financing of the management of historical waste should be shared by all existing producers in collective financing schemes to which all producers, existing on the market when the costs occurred, contribute proportionately. Collective financing schemes should not have the effect of excluding niche and low-volume producers, importers and new entrants.”

The Articles of the WEEE Directive which are most relevant to the present dispute are Articles 5, 6, 7, 8, 9 and 15. I need only quote, however, from Article 8:-

“1.

Member States shall ensure that, by 13 August 2005, producers provide at least for the financing of the collection, treatment, recovery and environmentally sound disposal of WEEE from private households deposited at collection facilities, set up under Article 5(2).

2.

For products put on the market later than 13 August 2005, each producer shall be responsible for financing the operations referred to in paragraph 1 relating to the waste from his own products. The producer can choose to fulfil this obligation either individually or by joining a collective scheme.

Member States shall ensure that each producer provides a guarantee when placing a product on the market showing that the management of all WEEE will be financed and that producers clearly mark their products in accordance with Article 11(2). This guarantee shall ensure that the operations referred to in paragraph 1 relating to this product will be financed. This guarantee may take the form of participation by the producer in appropriate schemes for the financing of the management of WEEE, a recycling insurance or a block bank account.

The costs of collection, treatment and environmentally sound disposal shall not be shown separately to purchasers at the time of sale of new products.

3.

The responsibility for the financing of the costs of management of WEEE from products put on the market before the date referred to in paragraph 1 (historical waste) shall be provided by one or more systems which all producers, existing on the market when the respective costs incurred, contribute proportionately, e.g. in proportion to their respective share of the market by type of equipment.”

The First Defendant recognised that the proper transposition of the WEEE Directive into domestic law would require extensive engagement with many bodies involved in both the electrical and electronic goods market and the disposal of electrical and electronic waste; I mean by that producers, distributors, re-use organisations, treatment and recycling facilities and local authorities. I am told that in order to inform the work of developing appropriate regulations the First Defendant carried out four formal public consultation exercises the purpose of which was to invite views from a broad range of parties likely to be directly or indirectly affected by the new legislation. The Claimant was one of the parties who made representations to the First Defendant in advance of the drafting of the Regulations.

The bulk of the Regulations came into force on 2 January 2007.

The Regulations apply to electrical and electronic equipment (“EEE”) as specified in Regulation 5 and Schedules 1 and 2. The phrase “compliance period” appears in many of the regulations. It means the first compliance period (defined to mean the period 1 July 2007 to 31 December 2007) and/or any calendar year following the first compliance period.

Regulation 8 is in the following terms:-

“(1). In each compliance period, the financing of the costs of the collection, treatment, recovery and environmentally sound disposal of WEEE from private households that –

(a)

is deposited at a designated collection facility; or

(b)

is returned under Regulations 32 or 40A but is not deposited at a designated collection facility,

during that compliance period (the relevant “WEEE”) shall be the responsibility of all producers who put EEE on the market in the United Kingdom in that compliance period.

(2)

Each producer to whom paragraph (1) applies shall be responsible for financing the costs of the collection, treatment, recovery and environmentally sound disposal of an amount of the relevant WEEE.”

Paragraph (3) provides the formula by which the amount of the relevant WEEE for which each producer shall be responsible under paragraph (2) is be calculated. The phrase “designated collection facility” (“DCF”) means an establishment or undertaking carrying out collection operations and approved by the First Defendant under Regulation 55.

Regulation 9 provides that each producer shall finance the costs of collecting, treating, recovering and disposing of WEEE from other than private households. It contains no equivalent formula to that set out in Regulation 8(3) for determining the amount of WEEE for which a producer is responsible. Regulation 10 provides:-

“(1)

A producer shall be a member of a scheme in respect of any compliance period, or any part of a compliance period during which he puts EEE on market on the United Kingdom.

(2)……..

(3)………

(4)

Where paragraph (1) applies – (a) a producer who has obligations under both regulations 8 and 9 in respect of any compliance period or any part of a compliance period may join –

(i)

one scheme that has been approved under regulation 41 for the purposes of regulations 22 and 23; or

(ii)

one scheme that has been approved under regulation 41 for the purposes of Regulation 22 and

(iii)

one scheme that has been approved under regulation 41 for the purposes of regulation 23; and

(b)

a producer who has obligations under regulation 8 or 9 but not both in respect of any compliance period, or any part of compliance period, may join –

(i)

in the case of a producer who has obligations under regulation 8, one scheme has been approved under regulation 41 for the purposes of regulation 22; or

(ii)

in the case of a producer who has obligations under regulation 9, one scheme that has been approved under regulation 41 for the purposes of regulation 23.

(5)

subject to paragraph (a) where a producer is a member of a scheme that has been approved under regulation 41 for the purposes of regulation 22, he shall be exempt from complying with any obligation that he has under regulation 8(1) in respect of a relevant compliance period during which his membership of that scheme subsists.”

Regulation 10(6) is in identical terms to Regulation 10(5) save that it relates to Regulations 9 and Regulation 23.

Regulation 22 reads:-

“(1)

Where Regulation 10(5) applies in relation to a scheme, the operator of that scheme should be responsible for financing the costs referred to in regulation 8(1) for which each scheme member is responsible under regulation 8 in any compliance period, or any part of a compliance period, during which his membership of that scheme exists.

(2)

It shall be the duty of the appropriate authority to determine the amount of relevant WEEE for which each operator of a scheme shall be responsible under paragraph 1 by applying the calculations set out in paragraph 3.”

It is common ground that the “appropriate authority” within this regulation is the Second Defendant in England and Wales and the First Interested Party in Scotland. Regulation 22(3) sets out the calculation by which the amount of WEEE for which each operator of a scheme shall be responsible can be determined. Regulation 23 has mirror provisions for operators of a scheme in relation to the financing of WEEE from users other than private households as exist under Regulation 9.

Regulation 26 imposes upon an operator of a scheme an obligation to ensure that systems are set up to provide for recovery of such WEEE as it is responsible under the Regulations. Regulations 27 and 28 impose upon operators of schemes duties of reporting to the relevant authorities. Regulation 27 provides:-

“(1)

An operator of a scheme shall provide to the appropriate authority information on –

(a)

the total amount in tonnes of WEEE that he has been responsible for –

(i)

collecting from a designated collection facility;

(ii)

delivering to an AATF for treatment or an approved exporter for treatment outside the United Kingdom; and

(b)

the total amount in tonnes of WEEE that he has been responsible for making available for re-use as a whole appliance,

during a relevant compliance period.”

AATF means an approved authorised treatment facility.

Regulation 29 provides that the operator of a scheme who has obligations, inter alia, under Regulation 22 or 23 has a duty to provide “a declaration of compliance” to the appropriate authority on or before 1 June of the year that immediately follows the end of any relevant compliance period. Regulation 29(2) demands that a declaration of compliance shall be in writing; that it shall include the information specified in Part 2 of Schedule 5 and that it be accompanied by copies of all “evidence notes” acquired in respect of the relevant compliance period. I deal with the concept of evidence notes later in this judgment. Regulation 30 imposes an obligation upon an operator of a scheme to keep appropriate records.

Regulation 41 deals with applications for approval of proposed schemes. Paragraph (4) specifies what must be contained within the application for approval; one of the items is an operational plan which must contain the information set out in Part 3 of Schedule 7. Regulation 41(5) provides that an application for approval of a proposed scheme shall be granted where:-

“(b)… the appropriate authority is satisfied that the information provided by the operator of the proposed scheme in accordance with paragraph (4) demonstrates that –

(i)

the proposed scheme is likely to subsist for a period of at least three compliance periods;.

(ii)………..

(iii)

the criteria for approval of a scheme set out in Part 4 of Schedule 7 are met.”

Regulation 43 provides that approval of a scheme shall be subject to a number of conditions including:-

“(i)

that the operator of that scheme continues to meet the requirements for approval of a scheme set out in Part 4 of Schedule 7.”

Schedule 7 of the Regulations consists of four parts. Part 1 sets out the information to be included in an application for approval of a producer compliance scheme. Part 3 sets out the information to be included in the operational plan of the scheme and Part 4 sets out the requirements for approval and continued approval of a scheme. Part 4 contains a number of detailed provisions. Paragraph 4 is crucial to the dispute in this case. It reads:-

“That the operator of the proposed scheme or scheme has viable plans to collect an amount of WEEE that is equivalent to the amount of WEEE for which it will be responsible for financing under these Regulations.”

The interpretation of this provision is a matter of fierce debate with which I will deal in a separate section of this judgment.

Regulation 44 empowers the appropriate authority to withdraw approval of a scheme. Withdrawal of approval is permitted where the appropriate authority is satisfied that a producer compliance scheme is in breach of any condition specified in Regulation 43.

Regulations 46 and 47 provide as follows:-

“46(1) A person shall not issue an evidence note under regulation 47(2) in relation to the re-use, treatment, recovery or recycling of WEEE unless he is at the time of issue an operator of an AATF and that evidence relates to WEEE received by or on behalf of that AATF in a relevant approval period.

(2)

A person shall not issue an evidence note in relation to WEEE exported for re-use, treatment, recovery or recycling unless he is at the time of issue an approved exporter and that evidence relates to WEEE exported by him in a relevant approval period…….”

Regulation 47(1) relates to applications for approval for authorised treatment facilities and the export of WEEE. Regulation 47(2) provides:-

“An application for approval made by –

(a)

an operator of an ATF, to issue an evidence note in relation to –

(i)

the re-use of WEEE as a whole appliance,

(ii)

the treatment of WEEE at an ATF, and

(iii)

the recovery or recycling of WEEE at a re-processor; or

(b)

an exporter, to issue an evidence note in relation to WEEE that is exported for re-use as a whole appliance, treatment, recovery or recycling …………

shall be granted where the appropriate authority is satisfied as to the matters set out in paragraph (3) and shall otherwise be refused.

Pursuant to Regulation 2(1) the phrase “evidence note” means any of the following:-

“(i)

An operator of an AATF, as evidence of the receipt of tonnage of WEEE specified in the note for –

(aa) re-use as whole appliance,

(bb) treatment at an ATF or (CC) recovery or recycling at a re-processor, or

(cc) recovery or recycling at a reprocessor, or

(ii)

an approved exporter, as evidenced of the export of tonnage of WEEE specified in the note for –

(aa) re-use as a whole appliance, or

(bb) treatment or recovery or recycling,

outside the United Kingdom; and

(b)

an evidence note issued by the Secretary of State under Regulation 58”

It follows from these rather convoluted provisions that an evidence note may be issued by an operator of an AATF, an approved exporter or the First Defendant. Regulation 58 authorises the First Defendant to buy and or sell evidence notes as well as issue evidence notes.

There is no provision within the Regulations which either expressly permits or expressly prohibits the sale and purchase of evidence notes by producer compliance schemes from each other.

I touched on the powers of enforcement contained within the Regulations in my introduction to this judgment. I should point out the following features of the enforcement powers. First, the power to take proceedings for an offence under the Regulations lies with the Defendants in relation to offences committed in England and Wales and with the Procurator Fiscal in relation to offences in Scotland. Second, the enforcement authorities have power to issue enforcement notices if they have reasonable grounds for suspecting that the requirements of certain regulations have not been complied with. The Regulations in question are specified in Regulation 71. Third, Regulation 72 confers powers of entry and inspection upon enforcement authorities. Fourth, Regulation 73 creates the offences under the Regulations. A producer compliance scheme is guilty of an offence if it fails to comply with, inter alia, Regulations 22, 23, 25, 26, 27, 28, 30 and 43. Any person is guilty of an offence if he fails to comply with an enforcement notice without reasonable cause (see Regulations 73(8)(b).

There is one further regulation which I must mention. Regulation 39 makes it clear that a producer compliance scheme is not prevented from establishing a system or operating a system to take back WEEE from private households provided that system is consistent with the WEEE Directive. The possible use of this provision is explained in paragraph 39 below.

The Claimant is the operator of a scheme which has been approved under Regulation 41 of the Regulations; it is a producer compliance scheme. It is a limited company but it is non-profit making. Its members are a number of leading electrical and electronic goods producers.

By virtue of Regulation 22 the Claimant is responsible for financing the costs of the collection, treatment, recovery and environmentally sound disposal of WEEE from private households. The amount of the WEEE for which the Claimant is responsible is calculated by reference to Regulation 22(3).

The Second and Third Interested Parties are also producer compliance schemes. Although the obligation under Regulation 22 is to finance the costs of collection, treatment, recovery and environmentally sound disposal of an amount of WEEE calculated in accordance with Regulation 22(3), it is common ground that the Second and Third Interested Parties have actually collected far more WEEE than they need do in order to comply with their obligation under Regulation 22. They have done so quite intentionally. The Claimant alleges that as a consequence of their activities (and it may be others engaging in the same practice) in the first compliance period (July to December 2007) the Claimant was unable to collect sufficient WEEE in order to comply with its obligation under Regulation 22. Accordingly it claims that it was forced to purchase evidence notes from the Interested Parties (and perhaps others) so that it could make appropriate declarations of compliance in respect of that compliance period.

In its evidence the Claimant asserts that the purchase of evidence notes was undertaken at “ransom prices”. In his submissions on behalf of the Claimant, however, Mr Gordon QC did not seek to persuade me to accept that assertion. He presented the case for the Claimant on the basis that “over-collection” on the part of Interested Parties or others constituted a breach of paragraph 4 of Part 4 of Schedule 7 of the Regulations and he did not have to establish that the paying of ransom prices by the Claimant was a necessary requirement for the Second Defendant to take enforcement action in respect of the Third Interested Party’s alleged breach.

The Claimant makes the same complaint about the compliance period 2008. In summary, it alleges that the Second and Third Interested Parties have intentionally over-collected WEEE; there has been a consequent under-collection by the Claimant so that it has been forced to purchase evidence notes so as to comply with its obligation under Regulation 22. To repeat: the Second and Third Interested Parties do not dispute that they have intentionally collected more WEEE than was necessary to comply with their obligations under Regulation 22.

The Claimant contends, through Mr Gordon QC, that the key to the proper understanding of paragraph 4 is the word “equivalent”. The use of that word, submits Mr Gordon QC, shows that a producer compliance scheme has to have a viable plan to collect an amount of WEEE which corresponds to the amount for which it will be financially responsible under Regulation 22. A producer compliance scheme will be in breach of paragraph 4 if it either collects too much or too little compared with the amount for which it is responsible under Regulation 22.

The Defendant and First Interested Party are disposed to accept that interpretation of this paragraph. They point to a difficulty, however, if the paragraph is applied too stringently. A producer compliance scheme might find it difficult in any given year to predict, to the last tonne, the amount of WEEE for which it will be responsible under Regulation 22. If, despite its best endeavours, a producer compliance scheme under-estimates the amount of WEEE for which it will be responsible it will need to purchase evidence notes in order to comply with its obligation under Regulation 22. Similarly a producer compliance scheme may over-estimate the amount for which it will be responsible in which event it will or may need to sell evidence notes. The Defendants and the First Interested Party do not accept that “trading at the margins” in the circumstances where a producer compliance scheme has made a genuine attempt to estimate the amount of WEEE for which they responsible under Regulations 22 would be a breach of paragraph 4.

The Second and Third Interested Parties do not agree. They do not accept that over-collection of WEEE would be in breach of paragraph 4 even if it is quite intentional. Mr Hart QC, on behalf of the Second Interested Party, developed his argument in support of this contention in the following way. Paragraph 4 requires a producer compliance scheme to have in place the capacity and plans to collect at least enough WEEE to meet its obligations under Regulation 22. It does not prohibit over-collection. Mr Hart submits that a prohibition under paragraph 4 can be understood only by an “over-interpretation” of the word “equivalent”. He submits that the Regulations prohibit under-collection by Part 4 (Regulations 19-30) and that the use of the word “equivalent” in paragraph 4 is not to be taken as a peg upon which to hang the notion that over-collection is prohibited. He makes the obvious but often telling point that had the Regulations intended to ban over-collection they would have said so in express terms.

Mr Hart QC also submits that the Regulations do not prohibit over-collection for good reason namely that so to do would breach the underlying objectives of the WEEE Directive. He submits that one of the underlying objectives is the maximisation of separate collection and hence the maximisation of recovery and recycling. Over-collection, in the submission of Mr Hart QC, inevitably contributes to a high level of separate collection.

Finally, Mr Hart QC relies upon the fact (which must be right) that if the paragraph does prohibit over-collection the possibility arises that the Second and Third Interested Party (who have never denied over-collection) may have been committing criminal offences. He submits that much clearer language would be necessary before such a consequence could be contemplated.

Mr Morgan, on behalf of the Third Interested Party, adopts the same stance as Mr Hart QC. Mr Morgan lays particular emphasis upon the argument that much clearer language is necessary in order to create a prohibition the breach of which might result in criminal sanctions. Indeed, Mr Morgan submits that it is neither necessary nor appropriate for me to determine the meaning of paragraph 4 in these proceedings. He submits that there is no realistic prospect that this court will find that the Second Defendant has failed, unlawfully, to take enforcement action against his clients and, consequently, the interpretation of paragraph 4 should be left until it arises squarely for decision.

In submitting that I should not determine the meaning of paragraph 4 Mr Morgan stands alone. All the other parties before me invited me to give my view as to the meaning of paragraph 4. I propose to do so.

I accept that the use of the word “equivalent” in paragraph 4 must be looked at in context. The immediate context, namely the phraseology of paragraph 4 as a whole, is that the producer compliance scheme must have viable plans for the collection of WEEE. The operator does not have to collect the WEEE itself. This is consistent with the obligation imposed upon producer compliance schemes by virtue of Regulation 22. The obligation under that Regulation is to finance the various activities specified; the producer compliance scheme need not carry out the activities itself. Indeed, the theme running through the Regulations read as a whole is that a producer compliance scheme has financial responsibilities; there is no obligation placed upon a producer compliance scheme to collect or deal with WEEE.

It is common ground that the principles underlying the WEEE Directive and its Articles must be taken into account in interpreting the Regulations. I accept the submission made by Mr Gordon QC that the concept of producer responsibility is one of the important underlying principles which underpins the WEEE Directive. During the course of oral argument there was some debate between Mr Elvin QC, for the Defendants, and Mr Gordon QC about whether the principle of producer responsibility was the paramount consideration underpinning the WEEE Directive. In my judgment, nothing turns on that debate. It is sufficient for present purposes that I accept, as I do, that the concept is an important underlying principle. The concept of producer responsibility supports, in my judgment, the interpretation of paragraph 4 which is put forward by the Claimant, the Defendants and the First Interested Party. I do not find any contrary argument persuasive.

When the whole of paragraph 4 is looked at against the background of the Regulations as a whole and the WEEE Directive I have reached the clear conclusion that the use of the word “equivalent” within paragraph 4 is consistent only with the interpretation of the paragraph put forward by the Claimant, the Defendants and the First Interested Party. In my judgment, the use of the word is intended to ensure that a producer compliance scheme has viable plans to collect no more and no less than is necessary to meet its obligation under Regulation 22. If it does not have viable plans to collect a sufficient amount of WEEE a breach of paragraph 4 will be established. If its plans for collection envisage over-collection there will be a breach of paragraph 4.

A producer compliance scheme which is in breach of the terms of paragraph 4 will be in breach of a condition of its approval as a producer compliance scheme. That is clear from Regulation 43(i). A producer compliance scheme which contravenes Regulation 43 is guilty of a criminal offence (see Regulation 73(3)).

It seems to me to be necessary to stress, however, that paragraph 4 is designed to ensure that a producer compliance scheme has viable plans. What is the position if viable plans exist and the producer compliance scheme acts in accordance with those plans in relation to the collection of WEEE yet, nonetheless, the scheme either under-collects or over-collects as a matter of fact? In those circumstances, it seems to me that there would be no breach of paragraph 4. The obligation of the producer compliance scheme is to have viable plans. That does not mean, of course, that the producer compliance scheme can produce viable plans to collect an equivalent amount of WEEE to that for which it is financially responsible but then ignore those plans and collect more (or less) than the plans specify when there is no need to do so in order to comply with its obligations under the Regulations. If, however, viable plans exist for the collection of an equivalent amount of WEEE and they are implemented it does not seem to me that an actual over-collection or under-collection of WEEE which had come about only because of the difficulty in predicting the precise amount of WEEE which was necessary to comply with obligations under the Regulations would amount to a breach of paragraph 4.

It remains the case, of course, that producer compliance scheme which under-collects, as a matter of fact, in any compliance period will be in breach of Regulation 22 unless it regularises its position. It seems to me that it could do so by either purchasing evidence notes or invoking Regulation 39. That would be a matter of choice for the producer compliance scheme. As I have said there is no express provision within the Regulations which prevents a producer compliance scheme from purchasing evidence notes; indeed producer compliance schemes are permitted to purchase such notes from the First Defendant. As will become apparent, I do not think that the sale and purchase of evidence notes necessarily infringes the provisions of the WEEE Directive.

I regard the Regulations as entirely consistent with the Directive. I accept, entirely, as Mr Elvin QC points out, that a wide margin of appreciation is afforded to the United Kingdom in the way in which it transposes the Directive into domestic law. I further accept that the Regulations, when properly interpreted, are entirely consistent with the underlying principles of the WEEE Directive. I have identified one of those principles as being producer responsibility. It seems to me, however, that the Regulations are wholly consistent with the principles set out in the preamble to the Directive extracts from which are set out above.

Both Mr Elvin QC and Mr Hart QC rely upon the principles set out in Marleasing SA v La Commerciale Internacional de Alimentacio SA [1990] ECR 1-4135. It suffices that I say a proper application of the principles set out in that case results, in my judgment, in the conclusion that the Regulations are consistent with the WEEE Directive.

A great deal of debate occurred about whether the creation and/or existence of a market in evidence notes were consistent with the WEEE Directive. The Directive, itself, is silent upon this topic. It seems to me, however, that trading in evidence notes in the manner envisaged by the Defendants does not offend the underlying principles or the objectives of the WEEE Directive. It is to be observed that Article 8 of the Directive (from which Regulations 8 and 22 are derived) itself imposes financial responsibility upon producers or operators of a scheme as opposed to any other kind of responsibility for dealing with WEEE. Once it is recognised that this is the nature of the responsibility I cannot see how trading in evidence notes in the circumstances envisaged above can be considered inconsistent with the Directive. It seems to me that such trading is a legitimate means of ensuring that producers or producer compliance schemes comply with their financial responsibilities.

Accordingly, I conclude that the Directive has been lawfully transposed into domestic law by the Regulations.

The Claimant alleges that the Defendants’ failure to take enforcement action against the Third Interested Party is unlawful. The failure is allegedly unlawful because (a) it is irrational and/or unfair and (b) it is in breach of European Community Law.

I deal first with whether the Second Defendant has acted unlawfully in failing to take enforcement action against the Third Interested Party under domestic law. It is necessary to set out the relevant facts in some detail. I will endeavour to do so, chronologically.

As I pointed out earlier in this judgment, most of the Regulations were brought into force on 2 January 2007. The first compliance period was from 1 July 2007 to 31 December 2007. Producer compliance schemes in England and Wales were required to submit a declaration of compliance to the Second Defendant in respect of this compliance period by 1 June 2008. In fact the time for submitting such declarations was extended to 16 July 2008.

On 25 January 2008 the Claimant’s solicitors wrote long and detailed letters (in identical or virtually identical terms) to the Defendants. In the letters the solicitors alleged producer compliance schemes, in particular the Second Interested Party, were engaging in intentional over-collection of WEEE; the solicitors alleged that such practice was a clear breach of the conditions of initial and continued approval of the scheme. The Second Defendant was asked to invoke its powers to withdraw approval from producer compliance schemes which were intentionally over-collecting. The First Defendant was required to ensure in accordance with its residual powers under Regulation 70 that the Second Defendant invoked such powers. Further each Defendant was asked to confirm that no enforcement proceedings would be taken against the Claimant by reason of its under-collection of WEEE. On 29 January 2008 the Claimants’ solicitors wrote in identical or very similar terms to the First Interested Party.

The Second Defendant was the first to reply on 19 February 2008. It set out, in some detail, its view of the meaning and effect of the Regulations. It refused to give an assurance that it would take no enforcement proceedings against the Claimant itself. In relation to the requests for enforcement action against the Second Interested Party and other producer compliance schemes which intentionally over-collected WEEE the stance adopted by the Second Defendant was as follows:-

“Any enforcement action to be taken against Electrolink is a matter for SEPA, the appropriate authority for the PCS.

In the case of other schemes you have referred to that fall within the jurisdiction of the Environment Agency, we will be reviewing their revised operational plans having regard to the matters set out in paragraph 12, above, amongst other things. We will also further assess compliance of schemes when the declarations of compliance are submitted in the same way as we will assess the performance of your client. We anticipate that exercise will be completed by the summer, so that PCSs’ plans or variation of those plans will have been assessed as to whether they are viable in advance of compliance period 3. We expect all PCSs to comply with their obligations under Part 4 of the Regulations. If any PCS fails to meet those obligations we will assess the appropriate enforcement response based on a case-by-case basis.”

The First Defendant replied on 20 February 2008 and the First Interested Party replied on 28 February 2008. In his reply, the First Defendant made it clear that it was his view that operators of schemes should not significantly “over-collect or under-collect”. The First Interested Party replied on 28 February 2008.

By 19 February 2008 (the date of the Second Defendant’s reply), it had received and processed data in respect of the first quarter of the first compliance period. It had also received the relevant data for the second quarter of the first compliance period but that had not been processed. In his witness statement on behalf of the Second Defendant, Mr Harding provides a significant amount of detail about the Second Defendant’s knowledge of problems associated with over-collecting and under-collecting as a consequence of the data which it had obtained – see in particular paragraphs 25 to 32.

Mr Harding says that at a meeting on 10 April 2008 at which representatives of producer compliance schemes and regulators attended the representatives of the regulators made it clear that a viable plan to collect an amount of WEEE equivalent to the obligation imposed by the Regulations in respect of financing meant avoiding significant over-collecting or under-collection. Mr Harding also says, however, that there was a recognition on the part of the Second Defendant that if a producer compliance scheme had already contracted to collect WEEE from the operators of designated collection facilities the Second Defendant would not wish to disturb that arrangement particularly if it would threaten the collection of WEEE.

On 2 July 2008 the Defendants and First Interested Party issued a joint letter to all producer compliance schemes. The letter dealt, specifically, with schedule 7 of the Regulations. The following extracts from the letter are important.

“……..

The first compliance period has now ended and producer compliance scheme should have submitted declarations of compliance to the appropriate agency by the 16 June 2008 to avoid the risk of enforcement action.

As anticipated, the first compliance period was a settling in and learning experience for all those involved in the system particularly producer compliance schemes (PCS) in developing their membership base, agreements with the designated collection facility operators and relationships of other schemes. As we are now half-way through the second compliance period it is appropriate to remind all PCSs of their ongoing obligations under the Regulations and particularly what their operational plans are expected to contain and to clarify the approaches the Environment Agency shall be taking going forward.

Schedule 7 Part 4 of the Regulations clearly sets out the requirements that must be adhered to in order to ensure continuing scheme approval. This letter is specifically about the requirements of paragraphs 3, 4 and 6 which states

……….

It should be noted that the word ‘equivalent’ used in paragraph 4 of Schedule 7 Part 4 means that schemes should not be putting forward plans which result in significant over or under collection in relation to their obligations. Furthermore this relates to amounts of WEEE collected not the level of evidence obtained by schemes after trading. In assessing, on an ongoing basis, whether a scheme has viable plans to collect the required amount of WEEE, such assessment will not take into account trades or the potential for trades, given they do not effect the collection obligations. It is therefore not acceptable for operational plans to centre on the trading of excess evidence either during the compliance period or in the settlement period up to the end of May.

The environment agencies will shortly begin examining the recently amended operational plans against quarterly collection data and against indicative obligations for 2008 and final obligations for 2007. This will include looking at the amount of WEEE arising at DCFs under regulation 8 or directly from distributors or end users under regulations 32, 39 and 40A.

If it is apparent to the environment agencies the schemes are under or over collecting in relation to their historical and/or indicative obligations, they will expect action to be taken to correct this and will discuss with the scheme measures to bring them in line with the regulatory requirements. This may include agreeing an action plan to divest themselves of DCF sites, increasing the number of DCFs they clear and/or changes in collection arrangements. Any action plans might also include a firm time table for change which will then form part of the operational plan.

As you are aware the Settlement Centre is a facility which has been developed to assist schemes, the Environment Agencies and BERR in monitoring obligations and progress with the issuing of evidence throughout the compliance period. There is a facility within the Settlement Centre for schemes to advertise excess evidence for sale or post notices that they would like to purchase evidence. The Settlement Centre should not be viewed as a trading floor. Trading of evidence during or at the end of compliance period should be seen as a marginal activity which acts as a balancing mechanism, not a central feature of operational plans.”

On 4 July 2008 the Claimant wrote detailed and identical letters to the Defendants. It sought confirmation that no enforcement action would be taken against the Claimant by reason of the fact that it had not, at that date, submitted a declaration of compliance. The letter also referred to a conversation between Mr Morton on behalf of the Claimant and Mr Pedrotti on behalf of the First Defendant to the effect that the First Interested Party would take enforcement action against the Second Interested Party (in respect of an alleged breach of Part 4 of Schedule 7 of the Regulations) before the end of July and would rigorously pursue enforcement against the over-collection policy.

In an email dated 7 July 2008 from Mr Pedrotti to Ms Janette Ollerhead (Dr Morton’s personal assistant) Mr Pedrotti wrote:-

“I can also confirm that both the EA and SEPA will be reviewing the end of year submissions (Declarations of Compliance and statements of mitigation) and Operational Plans of all PCSs and, where necessary, will be setting up meetings with schemes to discuss the latter, especially in relation to Schedule 7 of the Regulations. As I am sure you will appreciate, it is not possible for me to pre-judge the conclusions of such discussions.”

On 15 August 2008 the Claimant wrote to the Minister of State for Energy. It did so because it was concerned about the unresolved issue of dealing with excessive under and over-collection. The Claimant made suggestions for dealing with the issue. On 3 September 2008 the Minister replied.

There was an exchange of correspondence between the Claimant and the Second Defendant in September and October 2008. On 5 November 2008 the Claimant wrote long detailed letters to the First Defendant and the First Interested Party. The letter sent to the First Defendant was copied to the Second Defendant. The letter began by complaining about the lack of enforcement activity against producer compliance schemes which did not collect an amount of WEEE that was equivalent to the amount of WEEE for which it would be responsible for financing under the Regulations.

On 28 November 2008 the Second Defendant wrote to the Claimant. It was not, ostensibly, a reply to the letter of 5 November 2008 sent to the First Defendant which had been copied to the Second Defendant. In this letter the Second Defendant made clear how it interpreted paragraph 4 of Part 4 of Schedule 7 of the Regulations. The interpretation set out was entirely consistent with the interpretation which had been given previously in the joint letter of the Defendant and the First Interested Party issued on 2 July 2008. The letter also made a number of suggestions about how, in practice, producer compliance schemes could balance their collection arrangements with their financing obligations. The letter ended with these paragraphs:-

“Most existing compliance schemes were approved early in 2007 when the WEEE Regulations first came into force. This approval was for three compliance periods, so will expire at the end of 2009. Any of these schemes that wish to operate from 2010 onwards will have to apply for approval again between 1 July and 31 August 2009. The operational plans that are submitted with those applications must include a viable plan to collect an amount of WEEE that is equivalent to the expected obligations of the scheme’s members from the start of 2010. If it does not, then the application will be refused.

Schemes like yours that currently have an imbalance between collection arrangements and obligations must also take steps now to correct this. When assessing the viability of the operational plans next summer we should take account of historic performance. Schemes that have made little progress in bringing their collection arrangements and obligations into balance are likely to have to provide much more detail support the viability of their operational plans than those who have already demonstrated their intention and ability to act.”

By email dated 2 December 2008 the Claimant queried, immediately, whether the enforcement authorities had sent the same letter to all other over/under collecting producer compliance schemes and whether the same enforcement policy was to be applied in each of their jurisdictions.

I cannot trace a reply to that email in the Trial Bundles. That may be my error. It matters not since in his witness statement Mr Harding says that the letter of 28 November 2008 was sent to 12 producer compliance schemes; 4 schemes that had under-collected and 8 that had over-collected. Mr Harding also says that the message contained within the letter of 28 November 2008 was one which had been signalled, specifically, throughout 2008.

In his witness statement Mr Harding says that in January 2009 the Second Defendant compared the reports provided by producer compliance schemes relating to the collection of household WEEE during the first three quarters of 2008 with the obligation that the Second Defendant had calculated would apply to those schemes at the same point in the year. As I understand it this showed that there were 9 over-collecting schemes identified in January 2009. The First Defendant has required these 9 over-collecting schemes (and the 4 under-collecting schemes) to describe the arrangements they have in place for collection and treatment and the action they are taking to align the amount of WEEE they collect with the obligations of their members (see paragraph 49 of Mr Harding’s witness statement).

On 26 January 2009 the solicitors for the Claimant sent pre-action protocol letters to the Defendants. On 28 January 2009 Scottish solicitors sent a pre-action protocol letter to the First Interested Party on behalf of the Claimant. The First Interested Party sent a detailed reply on 10 February 2009 and the Treasury Solicitors, on behalf of both Defendants, replied on 11 February 2009. These proceedings were commenced on 27 February 2009.

On 7 August 2008 the Second Defendant issued a document entitled “Enforcement and Prosecution Policy.” The document is helpful in identifying the sort of considerations which influence a decision to take enforcement action; the document is also a useful reminder that enforcement action can take many forms from warning at one extreme to criminal prosecution at the other. There is no specific part of the guidance, however, which is particularly relevant to the issue before me.

In my judgment the following features emerge clearly from the correspondence and history set out above. First, the Second Defendant has made clear both to the Claimant and all other producer compliance schemes that it considers intentional over and under-collection of WEEE to be in conflict with paragraph 4 of Part 4 of Schedule 7 of the Regulations. That has been its unequivocal position since April 2008 at the latest. Second, the Second Defendant has taken a deliberate decision to take no criminal proceedings against either over-collecting producer compliance schemes or under-collecting schemes for the compliance period ending 31 December 2007. No other enforcement action in respect of that period would now have any purpose. Third, the date for the filing of declarations of compliance for the compliance period ending 31 December 2008 has only just expired. It is open to the Second Defendant to take criminal proceedings against over-collecting producer compliance schemes (or, for that matter, under-collecting schemes). Since an offence contrary to Regulation 73(3) is triable on indictment no time limit for bringing a prosecution applies. The Second Defendant has not committed itself, one way of the other, about whether it will take such action. Third, the third compliance period is now running its course. The Second Defendant has not indicated one way or the other, whether it proposes to take enforcement action consisting of either of issuing enforcement notices or instituting criminal proceedings in respect of this period. However, its tone in correspondence leaves no doubt it considers that intentional over-collecting of WEEE (or intentional under-collecting of WEEE) to be in conflict with paragraph 4 of Part 4 of Schedule 7. Fourth, the Second Defendant has made it clear that its interpretation of paragraph 4 will be an important factor when it considers whether or not to approve producer compliance schemes for the next three compliance periods. Fifth, the Second Defendant considered a “bedding- in” period to be justified given that the bulk of the Regulation came into to force on 2 January 2007.

In the light of the correspondence referred to previously and the features set out immediately above it seems to me that the Claimant’s complaint of failure by the Second Defendant to take enforcement action against the Third Interested Party can succeed only if I am satisfied that it was unreasonable or irrational for the Second Defendant to fail to (a) issue an enforcement notice against the Third Interested Party; (b) prosecute the Third Interested Party or (c) take steps to withdraw approval for its producer compliance scheme.

In reaching decisions about whether to invoke these enforcement measures the Second Defendant was exercising a discretionary power. That power must be exercised having regard to the circumstances of each case and to matters within the knowledge and informed judgment of the Second Defendant, including the strength of any evidence, the prospects of such action being successfully challenged and questions of proportionality.

Mr Gordon QC points out with some force that the Third Interested Party has never sought to hide the fact that it has engaged in over-collection of WEEE; it has collected amounts of WEEE which were significantly beyond the amount for which it was financially responsible under the Regulations. Further, as I have said, the Second Defendant has adopted a settled view of the meaning of paragraph 4, Part 4 Schedule 7 of the Regulations.

In his witness statement, on behalf of the Second Defendant Mr Harding has described in detail the steps taken by the Second Defendant during 2008, especially, in relation to the problem of over and under-collection of WEEE. It is clear from the statement that the Second Defendant decided to monitor the situation as opposed to taking action which might be described as more draconian. It also clearly took the view that the difficulties which the Claimant faced in complying with its financing obligations were largely of its own making due to commercial and other decisions made by the Claimant in advance of and after the Regulations came into force. While that view is vehemently contradicted by the Claimant I am in no position in a judicial review where evidence is not tested to make an informed judgment on that point. I must proceed on the basis that the Second Defendant’s judgment upon the reason why the Claimant faced difficulties was one which was open to it. It is too simplistic, in my judgment, to proceed on the basis that because there was over-collection by some producer compliance schemes there was a consequent and resultant under-collection by others. I suspect that the commercial realities are much more complicated but I have simply no means of knowing.

It is now extremely well-established that this court will be very slow to categorise as unreasonable or irrational decisions which are taken by prosecuting or enforcement authorities concerning whether or not to prosecute or take enforcement action. There is a plethora of domestic law cases which demonstrate how difficult it is for a Claimant to satisfy a court that a failure to prosecute should be regarded as unreasonable or irrational.

In my judgment, in the light of the history and features set out above there is no sound basis for the proposition that the Second Defendant’s failure to prosecute the Third Interested Party at any time to the present is irrational or unreasonable. Further the Second Defendant was entitled to take the view that a sudden and immediate cessation of arrangements entered into by the Third Interested Party might not only lead to difficult contractual issues but that it might also threaten the collection of WEEE (see the witness statement of Mr. Harding at paragraph 34). In my judgment the Second Defendant was entitled to take the view that disruption of the collection of WEEE, in particular, was a consequence which it should not lightly contemplate.

The same reasoning would apply with equal force and would militate against categorising as unreasonable or irrational the decision not to issue an enforcement notice or the decision not to withdraw approval from the Third Interested Party.

What it comes to is this. In my judgment the Second Defendant was entitled to reach the conclusion that a process of monitoring and warning (a process which it adopted throughout 2008) was a proportionate response to the problem of over and under-collection. As I have indicated the Second Defendant has signalled an approach which might be more proactive for the future and, to repeat, it has not committed itself about whether prosecutions may take place in respect of the compliance period 2008.

If that is the correct analysis in relation to the Second Defendant it follows that no complaint can properly be made against the First Defendant. Although the First Defendant has powers of enforcement which are equivalent to those enjoyed by the Second Defendant it is clear that the primary duty of enforcing Regulation 43 falls upon the Second Defendant. As I pointed out earlier in this judgment, it is Regulation 43 which makes it a condition of approval of producer compliance scheme that the schemes continues to meet the requirements for approval set out in Part 4 of Schedule 7.

The First Defendant has enforcement powers in relation to the Second Interested Party notwithstanding that it is a Scottish company. Regulation 70(2) imposes the duty of enforcing Regulation 43 in Scotland upon the First Interested Party. There is the added complication, however, that neither the First Defendant nor the First Interested Party has power to bring criminal proceedings in relation to a breach of the Regulations. That power is vested in the Procurator Fiscal in Scotland.

I am not asked to express a concluded view about whether the First Interested Party has unlawfully failed to take such enforcement action as was open to it against the Second Interested Party. However given the views I have expressed about the Second Defendant it will come as no surprise if I were to suggest that the evidence filed on behalf of the First Interested Party would seem to me to make the claim that it has acted unlawfully very difficult to maintain.

I have reached the clear conclusion that the enforcement authorities which are subject to the jurisdiction of this Court have not acted unlawfully under domestic law in failing to take enforcement action over and above that which they have taken to date.

The Claimant also complains that the failure to take enforcement actions is a breach of European Community Law. The submission is made that the continuing failure to take enforcement action against over-collecting producer compliance schemes constitutes a breach of the principle of equal treatment and, therefore, the WEEE Directive.

The principle of equal treatment requires that “comparable situations not be treated differently and different situations not be treated alike unless such treatment is objectively justified” – see Karlsson [2000] ECR 1-2737 para. 39. The Claimant submits that this principle is given specific effect by the principle of producer responsibility in the WEEE Directive and more particularly by the requirement in Article 8 of the Directive that each producer is responsible for financing the collection, recovery and treatment of WEEE equivalent to the volume of EEE that it places on the market.

In the written Skeleton Argument presented on behalf of the First and Second Defendants Mr Elvin QC and Mr Lewis respond with the following submissions among others. First, all producer compliance schemes have been subject to the same rules in having to meet their financial obligations, and have been in the same situation of having equal opportunity to enter into agreements to discharge their financing obligations. Second, the Defendants have adopted an even-handed approach to all those to whom the Regulations apply. Third, all producer compliance schemes in England and Wales, including the Claimant, which have found themselves in the comparable situation of not having collected an amount of WEEE “equivalent” to their obligations, have benefited equally from the Second Defendant’s decision not to pursue enforcement action against anyone.

In the leading textbook “The General Principles of EU Law” by Takis Tridimas the following short but informative passage appears:-

“Equality means consistency and rationality. A decision maker must treat similar cases consistently.”

It seems to me that the Defendants’ submissions are right on the issue of European Community Law. I can find no basis for concluding that the Defendants have failed to be consistent or rationale or have failed to treat similar cases consistently.

The Claimant is not entitled to declaratory relief to the effect that the Defendants have acted unlawfully. In my judgment the claim that the Defendants have failed irrationally, unreasonably, or in breach of European Community Law to take enforcement action against the Second and Third Interested Parties fails. Whether declaratory relief is necessary in relation to my interpretation of paragraph 4 Part 4 of the Regulations is necessary I leave, at this stage, to the consideration of the parties.

This hearing was a rolled-up hearing. I have no doubt that permission to apply for judicial review should be granted. However, as I have said, I do not propose to grant relief to the Claimant which would have the effect of declaring that the Defendants have acted unlawfully. Whether any other relief is necessary will be resolved after the parties have given consideration to that point.